ORLANDO —Speed was of the essence when daily deals provider LivingSocial and JPMorgan Chase & Co. last year decided to collaborate on a Visa-branded credit card that would be the first in the "deals" market.
In a fast-changing market where first movers tend to grab the greater market share, New York-based LivingSocial, which competes with the likes of Groupon Inc. in the daily-deals market, knew there was no time to lose in developing a product. The firms unveiled it May 1 (see story).
Though it took a year from the time LivingSocial executives first considered the idea its rollout, that was a very quick turnaround in industry terms, Eric Marks, managing director of Auriemma Consulting Group, told attendees at a Card and Expo Forum seminar here May 10.
LivingSocial's leaders realized fairly quickly they couldn’t develop a payment card and network on their own, said Matt Cicinelli, finance manager for LivingSocial.
“We knew we had 65 million subscribers [to the daily deals service], but we asked ourselves how to engage them,” Cicinelli explained. “We felt we had to have a payment card, but needed some expertise to guide us.”
After realizing the complexities of a payments system network and its security, Cicinelli said LivingSocial turned to Auriemma Consulting and its understanding of the industry to guide them through the process.
The companies worked very fast, striving to be "open to ideas and discussions when at the negotiating table," Marks said., Marks said.
The result is a rewards card enabling customers to receive 5% back on purchases through LivingSocial merchant deals, 3% back on dining purchases and 1% back on every other purchase with the card, he said. Cardholders also earn $30 off the first purchase made with the card, and a $10 credit after completing 10 purchases with the card, Cicinelli explained.
The collaboration underscores possibilities for other payment industry players to develop products in the daily-deals and social-media arenas, Marks suggested.
The challenge for companies such as LivingSocial is finding ways to lure and retain more merchants, as well as dangling deals that will continue to interest consumers, he said.
Moreover, such new products will likely need to have provisions for sharing customer data, which is becoming increasingly important for merchants interested in harnessing data analytics for marketing purposes, he added.
“The partnerships can also tap into social gifting and social donations, where groups of people join together to purchase a gift or make a donation to a charity,” Marks said.
Cicinelli contended that social media companies are becoming important movers in the payments landscape for a variety of reasons, including the fact that many businesses are now acquiring a large share of new customers through social media channels.
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